The outlook for the lumber sector in B.C. Interior, ravaged by the mountain pine beetle, isn't as pessimistic as an industry report would suggest, Forests Minister Pat Bell said Thursday.

Bell was commenting on a forecast published Wednesday by analysts at Vancouver's International Wood Markets Group, which warned the peak of sawlog availability will occur within three to five years, after which the Interior's industry is headed for serious downsizing.

The government is working on strategies to stretch the Interior timber harvest to preserve the industry, said Bell, who represents the forestry-dependent riding of Prince George North.

"It certainly is a priority of the ministry and mine personally to do whatever we can to mitigate that mid-term timber-supply shortage," he said in an interview from Prince George.

The ministry estimates the pine-beetle epidemic that began in the mid-1990s, made worse by warm winters that failed to kill off the pest, has destroyed a total of 620 million cubic metres of timber. The outbreak has affected an area four times the size of Vancouver Island.

Peak output by 2015

The International Wood Markets Group report, released Wednesday, said the pine-beetle epidemic could eventually kill up to one billion cubic metres of standing lodgepole pine timber.

"While a massive salvage program has been underway for much of the last 10 years, eroding log quality, poorer conversion economics and shorter shelf-life of the dead timber will all result in a much smaller B.C. industry in the future, as a result of sawmill and plywood mill closures with significant and direct consequences expected for rural B.C. communities," the report said.

"Depending on a wide range of market variables and processing assumptions, the B.C. Interior may be able to delay the inevitable, but peak sawlog availability and output is now forecast to occur within 3-5 years."

The report said reduced production will drive up lumber prices in the medium term for surviving mills, but Canada's dominant share of the U.S. softwood lumber market could drop by 50 per cent.

Other industries that use lumber waste products to produce pulp, paper, wood pellets, panel board and electricity will also be hit by the production downturn, the report said.

"These shortfalls may eventually lead to a decline in the profitability of these businesses or further plant closures."

Bell said his ministry is working with the forest industry to counter the trend.

"We are very engaged in determining what we can do to mitigate the mid-term timber supply risks that have been identified," he said. "Filling the gap is the term that I use."

Infested wood still viable

Part of the plan involves extending the shelf-life of beetle-killed standing timber, which he said remains commercially viable significantly longer than originally expected.

"In the early years, we thought that the wood might last for two or three years after it was killed," said Bell. "What we're finding now is potentially we'll get 10 or more years. In fact, I've seen wood that's milled that's 20 years dead."

The B.C. Forest Service is also studying advanced siliviculture practices — increased fertilization, better stand management and planting stands in areas that are more suited to short-rotation forest practices — to bring new trees to maturity sooner.

Bell said the suggestion that B.C.'s once-powerful Interior forest sector is headed for permanent shrinkage may be too gloomy.

"I'm not convinced that's the case, so I guess I would say no, I don't agree with that," he said. "That was based on a certain set of assumptions that we've been operating under."

Bell said the picture looks brighter after factoring in strategies such as stretching the commercial life of beetle-killed stands and harvesting more of other species such as balsam, spruce and fir until new pine stands mature.

The predicted drop in sawlog availability could be delayed 10 years, and even 20 years in certain regions, he said.